Heartland Bank Review

We review the bank known for reverse mortgages, cheap home loans, car finance and the popular YouChoose everyday bank account.

Updated 18 July 2024

Summary

Heartland Bank is relatively unknown in New Zealand, primarily due to its lack of branches.
Distinctly New Zealand owned, the Auckland-based lender is perhaps most known for its reverse mortgage lending. But there's a lot more, and overall, we believe Heartland Bank is a challenger bank that brings competition to New Zealanders looking for better everyday accounts, better on-call and term deposit rates, and a faster business lending process.
Despite only having few branches, all products can be applied and activated online or over the phone.

In this guide, we look at the main features and products offered by Heartland Bank, including:

The Pros and Cons of Heartland Bank

Pros:

Low mortgage rates - Heartland continuously performs well in our best mortgage rates tables by offering below-market rates.
Business banking focused on speed and certainty - Heartland Bank's business loans offering lets small businesses apply to borrow up to $100,000 unsecured with a process that takes a few minutes. Best of all, the decision is made by the bank in seconds. No forms, no bank manager visits and interviews, and no stress.
Leading interest rates for term deposits and on-call savings, helping you save more, faster.

Cons:

Very little - while Heartland Bank doesn't offer KiwiSaver funds or general insurance products, this is not necessarily a bad thing. Banks rarely outperform the offering of challenger and specialist companies in terms of price and benefits.
Heartland Bank has a handful of branches and doesn't issue credit cards or debit cards. For online purchases, Online Eftpos is the only option and not every e-retailer accepts it.

Heartland Bank Products Review

In this section, we look at the four main products offered by Heartland Bank - Vehicle Finance, Everyday Transaction and Savings Accounts, Home Loans and Reverse Mortgages and Business Banking and Loans. Heartland Bank also offers rural loans, and we hope to review these in detail in the future.

Vehicle Finance

Heartland Bank offers secured vehicle finance. The interest rate you pay will depend on how much you want to borrow, the term of your loan, your income, your other financial commitments and your credit history.

Interest rates currently range from around 11% to 15% (secured). Several fees also apply, and for secured loans the most common are:

Application fee - $249.00 (if you apply directly with Heartland Bank) or $112 (if you come via a third party, i.e. a car dealership).
Third-party fee - Up to $500 (this is charged if you arrange your loan through a dealer, broker or another introducer)
Other fees - $7.39 PPSR fee (for registering your secured property against the loan), $20 refund fee (if you overpay your loan and Heartland Bank refunds you)
Debit card fee - $0.36 plus 1.63% of the payment amount if you make a loan repayment using a debit card.

What we like

Application fees are in line with other lenders, and peer-to-peer lenders such as Harmoney.
If you pay your loan off early, there is a very reasonable $23 fee so borrowers won't be stung with break fees or charges.
There is a 6% per annum charge above the current interest rate if repayments are late, which, within the industry, isn't unreasonable.

What we don't like

We understand that Heartland Bank, like any lender, is under no obligation to provide loan statement beyond the six-month minimum set by law. However, to help borrowers manage their money more effectively, we would encourage borrowers to ask for more frequent statements free of charge.
Heartland Bank has a network of referring partners, such as brokers and car dealerships. Charging a borrower a $500 fee for the 'introduction' is common practice in the personal loan market. However, we believe this is an onerous charge that shouldn't be worn by the borrower.
Better offers do exist and it's best to compare - our car finance comparison has more details.

Everyday Transaction and Savings Accounts

Heartland Bank offers YouChoose and our review of best bank accounts explains the offer in more detail. All deposits (direct credit, automatic payment, cash or cheque) and cash withdrawals (at the counter) are free.

Beyond YouChoose, Heartland Bank offers a range of on-call savings accounts that pay market-leading interest rates. Best of all, there are no setup or ongoing fees - interest is earned on every dollar in the account.

What we like

YouChoose is a strong product that rewards savers and helps those in overdraft with interest rates in their favour. Read more about it here.
For savers using call accounts, there is no lost 'bonus interest' for making withdrawals. Interest is calculated daily and paid out at the end of each month. This means you get interest for every day the funds are in the account during that month.
Heartland Bank's interest rates on savings and term deposits have been historically higher than those offered by the big banks; this fact has been routinely recognised in the media and industry awards.
For earners in the top tax bracket, the Heartland Term and Cash PIE Funds offer flexible saving options and are tax beneficial.

There’s no minimum deposit needed to open an account, and no monthly service fees.
All customers get 24/7 access via online and mobile banking.

What we don't like

Very little - Heartland Bank has cemented a reputation of offering higher-than-market interest rates, so there's little downside.
There's no option of a debit card - Heartland Bank only issues Eftpos cards. This limits the ability to make online purchases (which, arguably, can be helpful for those hoping to save) beyond the Online Eftpos service.
While the arranged overdraft interest rate is a friendly 10%, an unarranged overdraft incurs either an additional 6% p.a. (if you go over your approved overdraft amount) or an additional 10% p.a. (if you don’t have an overdraft set up).

Home Loans and Reverse Mortgages

Home Loans
Heartland continuously performs well in our best mortgage rates tables by offering below-market rates; you can view the latest rates here.

Reverse Mortgages
Heartland is one of the few providers of reverse mortgages; we've explained the pros and cons in our detailed Reverse Mortgages review. You don't need to be an existing Heartland Bank customer to take out a reverse mortgage, and how much you can borrow depends on your age.

How does my age affect how much I can borrow, and what is the interest rate?

Heartland Bank states quite clearly that "your maximum loan entitlement can be estimated by multiplying the value of your home by a percentage (calculated as the age of the youngest borrower on your loan minus 45)".
For example, if you have a $500,000 home and the youngest borrower is 75 years old, then $500,000 X 30% = $150,000. 30% comes from 75-45, per Heartland Bank's calculation.
More details: Heartland Reverse Mortgages

What are the fees?

Heartland Bank charges two upfront fees, which can be deducted from your drawdown.
Valuation Fee of your home: $600 (where rating value is below $1m) or $855 (where the value is above $1m or your home is a 'lifestyle property').
Initial Arrangement Fee: $1,050 (this is charged on the initial settlement date of your loan).

What we like

Heartland Bank consistently offers the best reverse mortgage deal in New Zealand by beating its competitors' interest rates.
Heartland Bank's reverse mortgage can be repaid at any time without penalty, giving customers the freedom to sell their home to free up further equity and repay the balance owed.

What we don't like

The reverse mortgage interest rate compounds daily, although this is a standard feature of the product across all lenders.
There are ongoing fees if you want to organise another advance ($475) and draw down on the agreed money ($75). These fees are deducted from each drawdown made, leaving you with less cash in hand.

Business banking

Heartland Bank heavily promotes its business loans to encourage small businesses to apply for a loan or revolving credit facility in under three minutes, and get a decision in seconds.

Heartland offers:

Unsecured lending up to $100,000
Partially secured lending up to $250,000
Apply in minutes (approximately ten questions) and get a decision in seconds (appears on screen).
If your loan is approved, Heartland's team in the background carry out a secure and industry-standard verification check, and when completed and confirmed, the loan is approved. Businesses receive the loan in approximately 48 hours.
The unsecured interest rates vary between 10% and 16.75% p.a. and an establishment fee applies to each loan.

The loans cover:

Revolving Credit Facilities for helping with cashflow
Small Business Loans for improving your business performance
Franchise Loans
Working Capital Loans
Asset Finance
Plant and Equipment Loans
Truck and Trailer Loans
Heavy Machinery Loans

What we like

Heartland Bank is actively promoting business lending - we wish this was the case with the big banks.
Heartland Bank has invested in technology to save small business owners time. Rather than traditional face-to-face meetings with a bank manager and lengthy application forms, Heartland offers online loans. The process takes minutes and looks at industry metrics, turnover and operating margins to reach a lending decision in seconds.
Heartland Bank states that for loans up to $100,000, in some cases, you won't need to provide additional security beyond personal guarantees.

What interest rate will I pay?
It depends - the interest rate is dependent on the credit score of the borrower (and any guarantors), servicing position of the loan and the purpose of the loan (e.g. working capital or an asset purchase).

What we don't like

Not much - fees for business loans are not available online and MoneyHub has requested them for publication.

Bank experience

Heartland Bank is relatively light on branches, with four in total open for business in Auckland (Newmarket), Tauranga, Christchurch and Ashburton. The bank is somewhat of a challenger and has a track record of offering above-market deposit interest rates and attractive lending options.

The bank’s website offers online banking, but its apps are generally not well regarded. Out of five stars, the Heartland Bank app has received an average of 2.7 stars according to Android users. The Heartland Bank team appears responsive to feedback and routinely posts about upcoming updates and improvements. Its app is poorly rated in the Apple store.

About Heartland Bank

Being a relatively young bank, Heartland was formed in 2011 as a merger of the Canterbury Building Society, Southern Cross Building Society, MARAC Finance and PGG Wrightson Finance. Each of these organisations brought their customer base and specialisations, with MARAC Finance being well known for car loans and PGG Wrightson focusing on rural business loans.

Today, the bank offers MoneyHub's favourite everyday bank account (YouChoose), leading deposit rates, business loans, vehicle finance and reverse mortgages. Heartland Bank has its headquarters in Auckland and serves tens of thousands of customers with vastly different needs all over New Zealand. While it's one the few New Zealand-owned banks operating, it doesn't offer credit cards, KiwiSaver or general insurance (beyond its vehicle-related products).

Do you think Heartland Bank is right for you?

Want to know more or sign up for an everyday transaction account, invest in a term deposit or something else? Calling their customer helpdesk is the best place to start.

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